INVESTIGATION: Raimondo Lobbied for Venture Pal’s Business

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Thursday, August 16, 2012

Stephen Beale, GoLocalProv News Contributor

General Treasurer Gina Raimondo last year found potentially hundreds of thousands of dollars of work in Rhode Island for a financial literacy program run by a former business partner and a campaign donor, a GoLocalProv investigation has found.

Pension reform aside, financial literacy has been a signature issue for Raimondo, during her campaign and in office. Soon after taking office, Raimondo went to bat for a program known as EverFi, touting its merits in several press releases and public meetings that generated a flurry of positive news coverage. A year after her efforts, EverFi has gone from a small pilot program in a handful of local high schools to a staple of the curriculum in almost every high school in Rhode Island.

An EverFi official declined to disclose yesterday the value of that work, but records uncovered by GoLocalProv suggest that the total value could be in the neighborhood of several hundred thousand dollars.

Raimondo’s office yesterday declined to answer specific questions about how Raimondo learned about EverFi and came to the conclusion it was the best program for Rhode Island schools. GoLocalProv asked if there was an RFP that has been issued—or since EverFi was not directly hired by her office, whether there was a comparable paper trail showing how EverFi was vaulted to the top. None was provided.

A web of business ties and donors

But there is a long paper trail showing close ties between Raimondo and the EverFi CEO, Thomas Davidson.

State finance records show that employees at Village Ventures, a venture capital firm where Davidson is still listed as a partner, contributed $6,000 to Raimondo’s campaign in 2009 and 2010. Davidson himself donated $525, listing EverFi, not Village Ventures, as his employer.

But the ties between the two run deeper. Raimondo herself got her start in the finance world at Village Ventures, based in New York City. She later went on to found Point Judith Capital Partners. Another Point Judith co-founder, Sean Marsh, also came from Village Ventures. The two maintained an association with their former employer: both Village Ventures and Point Judith are members of a network of partner funds aimed at leveraging more resources for large-scale investments.

 ‘Looks terrible’ for Raimondo

The revelation comes one week after GoLocalProv first reported that Raimondo’s office has awarded contracts and other work to six campaign contributors, including the decision about who would be the new custodial bank for the state’s estimated $8 billion in assets.

According to URI business professor Ed Mazze, Raimondo should not be doing business with anyone who contributed $350 or more to her campaign—to avoid any appearance of a conflict of interest.

Employee contributions at four of the six companies were at or in excess of that limit.

Last week’s story prompted state GOP chairman Mark Zaccaria to call on Raimondo to return the donations, calling the situation a clear case of “pay to play”—in which donations are made or other favors are done in exchange for government contracts.

Zaccaria said the latest revelation “looks terrible” for the Raimondo. “These individual instances don’t necessarily rise to the level of a legal issue, but from a political standpoint, where I do have some expertise, it looks terrible,” Zaccaria said. “If Ms. Raimondo is not paying attention to how it looks maybe she is already succumbing to the malaise that [afflicts] long-timers up there, that they feel entitled to the position and no longer have to respond to voters.”

Margaret Kane, the president of Operation Clean Government, said the new information merits further investigation. “I think we need to be vigilant with these kinds of things because oftentimes it’s hidden,” Kane said. “It’s not always obvious to the naked eye.”

But others are coming to the defense of Raimondo, including former state Treasurer Nancy Mayer.

“I think Gina’s done a lot for this state that just needed to be really done,” said Mayer, a Republican. “I respect her integrity because I don’t think she would have any motive whatsoever in becoming what we have come to think of as the typical Rhode Island politician, often on the take. I don’t think she’s like that at all.”

A different kind of campaign

Raimondo did more that issue just a few press releases singing the praises of EverFi. She put the full weight of her office behind the program, in endorsing it and vouching for its merits.  

A little over a year ago, high school teachers, administrators, and other educators received an e-mail invitation from Education Commissioner Deborah Gist for an informational meeting on EverFi at the Rhode Island Department of Education, scheduled for May 17.

But the meeting was arranged by Raimondo’s office, according to RIDE spokesman Elliot Krieger, who said his department refrains from endorsing “any particular literacy program.” (It was Raimondo and EverFi representatives who made the presentation on EverFi at the meeting, according to the invitation.)

Next month, in June 2011, Raimondo issued a press release “announc[ing] Rhode Island’s first Web-based platform financial literacy initiative.” The program, as described in the release, uses everything from 3-D gaming and social networking to “bring complex financial concepts to life” for students. Raimondo unveiled the program at an event at Lincoln High School, one of three schools piloting the program at the time. 

About a year later, the program was in 19 Rhode Island high schools, with 25 more expected to adopt it this year. (The company claims to be in 3,000 high schools nationwide as well.)

In Rhode Island, EverFi, which is a for-profit business, is not funded through the General Treasurer’s office. Nor does it receive local funds. Instead, several local banks serve as sponsors for the program. Navigant Credit Union is shouldering the cost of implementation in 14 high schools. Three other sponsors are Westerly Community, Pawtucket, and People’s credit unions, according to a recent news release.

EverFi bid for $375,000 in state work

An EverFi spokesman would not say how much his company has received in the sponsorships.

But state records give some hint at the total. One year ago, in June 2011, while high schools were lining up to adopt EverFi, an effort was underway to hire the company at the Rhode Island Student Loan Authority, a quasi-public agency which had had issued an RFP for a company that could provide online financial literacy education and set up a default prevent system. Two firms responded: EverFi and Decision Partners.

EverFi submitted a three-year bid worth $375,000 in total. Decision Partners (which is not listed on any campaign contribution records for Raimondo) said it could do the work for about a third of the cost, according to an internal memo dated July 18, 2011.

At a meeting a few days later, the board for the Student Loan Authority—which has a representative of Raimondo’s office among its voting members—authorized the staff to negotiate a contract with EverFi, according to Charles Kelley, the executive director at the authority. The vote, for which her representative was present, was unanimous.

Kelley denied that the Treasurer had had any role in pushing EverFi to the top of list. “The Treasurer’s office had no participation in trying to suggest anybody,” he said.

Company pulls out of deal

The contract never materialized. Instead, EverFi pulled out of the deal in an August 18, 2011 letter.

“Since we submitted our proposal, EverFi has identified alternative private sources to underwrite the cost of the EverFi Financial Literacy Platforms across Rhode Island, and recently have received substantial commitments to that end,” wrote Ray Martinez, the executive vice president at EverFi. “These sources of funding will allow EverFi to achieve the same goals outlined by RISLA in its Request for Proposal with our common purpose of ensuring all Rhode Island students are prepared for their financial futures.”

So why didn’t the Student Loan Authority go back to the next bidder, Decision Partners? Or one of the other five companies it initially screened for the work? “The others we just didn’t feel were worth the money,” Kelley said.

Instead, he said the Student Loan Authority decided to do the project in-house.

Spokeswoman: ‘Treasurer’s integrity is not for sale’

Asked to comment, Raimondo spokeswoman released the following statement to GoLocalProv:

“Expanding access to financial literacy programs in Rhode Island is a top priority for Treasurer Raimondo. The office always looks to highlight good work happening in the community, especially regarding efforts to increase financial skills and understanding,” said spokeswoman Joy Fox. “She believes our state will become stronger if families are able to access programs that provide them with a greater understanding of how their personal finances work and how to avoid risky financial products.”

She added: “It is commendable that our state’s credit unions are continuing to take an active role in this effort, by providing access to the state’s first Web-based financial literacy tool to students at no cost to the school departments or taxpayers. There is no public financing or public contract supporting the EverFi program. The Treasurer’s integrity is not for sale at any price.”

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